Construction is expected to bring in 27 billion euros by 2026
Avenue Kymis. The consortium of construction companies Terna, Aktor and Intrakat came up with the best offer, amounting to 434 million euros, for the extension of Kymis Avenue in the north of Athens, while the Ministry of Transport yesterday unveiled the financial offers for the 3.4 kilometer road project. The consortium has set the timeframe for completion at four years.
The resources of the Recovery and Resilience Fund could well become the catalyst for construction to once again become one of the mainstays of the Greek economy, after the contraction of the past 15 years.
According to a study by the Foundation for Economic and Industrial Research (IOBE) on behalf of the Public Works Engineering Contractors Fund (TMEDE), the total resources that should be mobilized for construction projects should amount to a total €27 billion (€13.3 billion grants and €13.7 billion loans) for the period 2022-26.
In addition, IOBE estimates that €8.7 billion will be allocated to infrastructure under the European Union’s new grant program (NSRF 2021-27). In the medium term, additional investment in infrastructure and housing is expected to represent up to 4.1 percentage points of gross domestic product per year (compared to 2020) – with the share of investment in construction increasing from 4% in 2020 to 8.1% of GDP in 2025. .
At the same time, this jump in construction is expected to significantly increase the size of companies in the sector, with estimates pointing to a doubling of turnover 2021-26 to almost 20 billion euros in 2026 (compared to 10 billion euros in 2021). It is also estimated that the value of production of infrastructure and residential construction projects will follow a strong upward trajectory in 2022-26, exceeding 18 billion euros in 2025 (compared to 7.6 billion euros in 2020).
The challenge is quite big, not only for the construction industry, but also for the banks that will be called upon to finance companies to undertake the projects. According to IOBE, annual gross loan flows of €2-3 billion will be needed in 2022-26.
This is not an easy equation, given that project implementation times are very short, as the Recovery Fund program is pre-loaded, with most being contracted and implemented within the first two years. Difficulties in financing and higher borrowing costs for technical companies and professionals (compared to other eurozone countries) are obstacles.